Strata residents dodge holiday let by-law bans

UPDATED: Feb 10.

With Australia’s borders about to open to overseas tourists, there is considerable confusion over who can and can’t let their flats as holiday lets in strata blocks with “no-airbnb” by-laws.

And what it all boils down to is that owners and tenants who have a flat as their principal place of residence can’t be prevented from letting it through agencies like airbnb or Stayz, even when there is a “no holiday lets” by-law in place.

However, while resident-owners and tenants can run short-term lets of their whole apartments while they are elsewhere, for up to six months of the year, non-resident investor owners will be bound by any by-laws restricting or banning holiday lets.

By-laws can only be imposed in Greater Sydney strata blocks where short-term lets are also restricted to 180 nights per year. Elsewhere in NSW, with the exception of a handful of local government areas, there is no restriction on holiday lets in either houses or apartments.

The confusion arose because Planning NSW rules say if you aren’t actually staying in your home when your guests are there, that is an un-hosted let. Hosted lets – when you are in situ at the same time as your guests – have no limit on the number of nights.

Customer Service NSW and Fair Trading say the planning regulations on un-hosted properties don’t apply to strata, with the exception of the limit of 180 nights per year.

And even if there is a by-law banning holiday lets, residents can let their principal place of residence while they are “temporarily” away from the property.

A NSW Planning spokesperson confirmed this week that temporary absence could be every weekend or up to six months at a time.

The question about strata residents being able to by-pass their own airbnb by-laws was asked of both NSW Planning and Fair Trading after they issued apparently contradictory advisories about holiday lets.

The Fair Trading website says this about short-term holiday lets:

 …owners corporations can adopt by-laws that prohibit short-term rental accommodation in strata schemes, but only where the lot is not the host’s principal place of residence.

This means if someone lives in a strata property as their principal place of residence, they will still be able to rent out their home, or certain rooms, while they live there or are temporarily away from home.

This immediately provokes the questions, what is the definition of “principal place of residence” and even what is “temporarily” away from home.

Critics and concerned owners say the Fair Trading advice leaves it open for owners and tenants to rent out their entire flats for two or three nights at weekends, or for three or four months during summer when they are away on holiday themselves.

So what are these rules? According to this DPI website,  “… if you want to undertake non-hosted STRA in a strata building you must first check that there are no by-laws which prohibit STRA.”

This does not gel with the Fair Trading view.

“The State Environmental Planning Policy framework uses the terms “hosted Short Term Rental Accommodation (STRA)” and “non-hosted STRA”. These relate to whether the host is residing on the property while it is being let and determine whether a limit to a number of night stays per year applies,” a spokesperson said. 

“This is distinct from the requirements under the Strata Schemes Management Act 2015, which relate to whether a lot is a “principal place of residence” and therefore whether an owners’  corporation  could prohibit use of the property for short-term rentals.  

“Under a scenario where a strata resident wants to let their home for weekends while they are away, the owners’ corporation could not limit STRA provided the lot is the host’s principal place of residence. However, the host is still limited in the number of days in the year they can host while they are away.  

“This type of hosting is subject to the following limitations as “non-hosted STRA”: 180 days per year in Greater Sydney and nominated regional NSW LGAs and 365 days per year in all other locations.”  

In short, Planning’s “unhosted” regulations don’t apply in strata schemes. And long-term residents can let their apartments for up to 180 days a year, unhosted, which is exactly the same limit as there is on Sydney apartments where there is no by-law.

A NSW Planning spokesman stressed that even principal place of residence holiday lets had to abide by the state’s Short-term Rental Accommodation Code of Conduct and had to register the property on the holiday let register as an “unhosted” let, if they were planning to let it while they were elsewhere.

If that’s the case, by this time next year blocks all over Sydney could see opportunist apartment residents taking advantage of the “principal place of residence” loophole to rent their flats through the summer, just as if the no-airbnb by-laws had never been passed.

And blocks that have no holiday let by-laws could see a surge of sub-tenanted holiday lets as airbnb-dependent business seek buildings where they can ply their trade without additional restrictions.